Ratio between pensioners and employees could double by 2032 as compared to 2014, pension fund manager says

The ratio between pensioners and employees could double by 2032 as compared to 2014, which will cause problems in covering the necessary pension payments by the employees for those who enter the public pension system, said Iulius Postolache, CEO of Allianz-Tiriac Pensii Private and vice-president of the Association for Privately Managed Pensions in Romania (APAPR) at an event organized by the Bucharest Stock Exchange (BVB).

2017-04-28 12:38:12

"The increase of the pensioners - employees ratio can turn into a burden on everyone in the future," said the APAPR representative. "As days go by, more and more pensioners depend on one employee or taxpayer to have their pension assured. The private pension system was thought and created as the main solution to this problem."

The increase of the voluntary contribution and a better financial literacy rate will likely contribute to a satisfactory pension. "With 60 RON per month, the price of two tickets to the cinema, young people can save a good amount of money for their pension if they start saving from this moment on or from their first job," Corina Cucoli, general manager at Certinvest Pensii said. "The amount each employee contributes to the optional contributory pension fund are deductible from the income tax up to 400 Euro per year per participant, which corresponds to around 150 RON per month. The employers can also decide to grant an optional pension as a benefit to their employees, a contribution which is fully deductible."

Despite the economic crisis, the toughest of the last decades, the yearly average yields of the pension funds were significant, added BVB's chairman of the board, Lucian Anghel. "The managers of the pension funds have generated added value to the future pensioners and have reported since their establishment yearly average yields of 7.18 per cent for Tier III and 9.41 per cent for Tier II, respectively, according to the APAPR data."

The pension funds have invested over 1.3 billion Euro in the local stock market, generate over ten per cent from the average trading volume, while some 20 per cent of their portfolio is made up of shares in the listed companies.